German employment up, inflation negative

Thursday, April 28, 2016 - 01:35

A mixed bag of economic readings for Germany with a welcome fall in unemployment but an unwelcome fall in consumer prices. As Grace Pascoe reports, the inflation data once again puts the ECB in the spotlight.

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More Germans are in work now than any time since 1990.
The unexpected April fall leaves just 6.2 percent of the population unemployed.
And hopes are that private consumption will continue driving growth this year.
(SOUNDBITE) (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING:
"I think, you know, record low unemployment - you can't argue the economy is in very good shape, the only problem is it isn't growing very much and that may be a bigger issue particularly for helping others into recovery."
And an even bigger problem for the ECB and its inflation target of close to two percent.
Latest data shows German consumer prices fell in April, dropping by 0.1 percent on the year.
Germany is already pointing fingers at the ECB over its negative interest rates policy.
ECB President, Mario Draghi is at the ready to defend the policy in the Bundestag.
(SOUNDBITE) (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING:
"It is a bit rich for them to now criticize the ECB which has a similar kind of independence that they themselves designed. Of course they will moan and groan about the effect of the monetary policy, negative interest rates. Germans are of course big savers and they get nothing for their savings. But they have to look for alternative investments, that is what you do if you have got a low investment environment"
The German economy is still expected to grow this year - by 1.7 percent.
And euro zone economic sentiment is also on the up
Rising to 103.9 for April, beating market consensus.